About four years ago, I wrote about real estate developers promising fairly high, assured returns to those who bought in their projects. The returns were in the range of 12-15%, and the word used in advertisements was 'guaranteed'.

In India, it's practically impossible for anyone but the government to legally offer guaranteed or assured returns from financial products. Even public sector bank deposits are theoretically not guaranteed, though in practice they usually are. However, real estate developers claim to be immune to any uncertainty.

Recently, a Delhi-based developer has sharply upped the ante on the kind of returns that can be offered. In hoardings that have appeared over the past few days, this developer is offering 32% returns. The ad doesn't use the words 'guaranteed' or 'assured'. It is in Hindi and the word used is 'pakka', which means the same thing idiomatically.

An assured return of 32% is quite amazing. I am quite sure that such returns, or anything remotely close to it, have never been offered for any legitimate financial product. Of course, the advertisement is not written as if it is promoting a financial product. Ostensibly, the ad is for real estate, but it's clearly a sham. It mentions no characteristic of the real estate on offer, only the financial returns from owning it. Clearly, these developers are benefitting from the absence of the long-awaited real estate regulator, which is one reform that the new government seems to have forgotten about.

Recently, the Securities and Exchange Board of India (Sebi) was armed with enhanced powers to detect and shut down illegal financial schemes. Logically, it should be able to deal with financial products that are disguised as non-financial ones. This is not a new concept; we have seen everything from teak plantations to emu farming being offered to Indian investors. Most of the Saradha deposits were supposed to be down payments for apartments, essentially a deposit in the garb of real estate. Sebi should nip such scams in the bud before they assume monstrous proportions.

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